US Imposes 50% Tariff on Semi-Finished Copper Products to Boost Domestic Production

The United States has implemented a 50% tariff on semi-finished copper products and copper-intensive derivative products, effective from August 1. This move, announced by the President on July 30, targets items such as copper pipes, wires, rods, plates, and tubes, as well as fittings, cables, connectors, and electrical components. The tariff is part of a broader strategy to enhance domestic production and reduce dependence on foreign imports, following similar measures on steel and aluminum.

The tariff applies universally to all semi-finished copper products and copper-intensive derivative products, regardless of their country of origin. However, it does not include raw materials such as copper ore, refined copper, or copper scrap. This exemption is intended to ensure that the tariff does not disrupt the supply chain for essential raw materials needed for domestic production. The tariff is based on the 232 clause of the 1962 Trade Expansion Act, which allows the President to impose tariffs or set quotas on imported products for national security reasons.

The administration has emphasized that the new tariff is aimed at promoting domestic industry and addressing trade imbalances. Approximately half of the refined copper used in the United States is imported, and domestic refining capacity is insufficient to meet demand. The country has only two copper smelters, owned by Freeport-McMoRan and Rio Tinto. Additionally, the United States has historically been a major exporter of copper scrap and concentrates, which are often sent to other countries for processing due to a lack of domestic refining capabilities. As part of the executive order, the President has mandated that 25% of high-quality copper scrap produced in the United States must be sold domestically.

Analysts have highlighted the significance of the copper scrap market this year and the potential for domestic copper processing growth if exports are restricted. The order stipulates that starting from 2027, 25% of copper input materials, such as copper ore, refined copper, and copper scrap, must be sold in the United States. This percentage will increase to 30% by 2028 and 40% by 2029. The order also authorizes the use of the Defense Production Act to promote the manufacture and supply of copper in the United States and directs the Department of Commerce to issue export license regulations for high-quality copper scrap.

Experts have warned that the copper tariff could increase the prices of various products, from construction materials to electronics, as these products all utilize this versatile metal. The tariff is part of a broader strategy to promote domestic production and reduce reliance on foreign imports, following similar measures on steel and aluminum. The long-term impact of the tariff on the copper industry and the broader economy remains to be seen, but it is clear that the measure will have significant implications for both domestic and international copper markets.